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Mecham Grassroots activism a hallmark of CU industry

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BOSTON (6/25/09)--Calling it a privilege to meet in the home city of Edward A. Filene, the father of the U.S. credit union movement, Credit Union National Association (CUNA) Chairman Kris Mecham noted that the area is rich in heritage and tradition. One such tradition: Credit unions’ history of grassroots activism began there, he told attendees at America’s Credit Union Conference and Expo.
Click to view larger image The credit union tradition of grassroots advocacy isn't new, Credit Union National Association Chairman Kris Mecham, president/CEO of Deseret First CU, Salt Lake City, told America's Credit Union Conference and Expo attendees Wednesday. Credit unions used grassroots advocacy for the first time when they mobilized a national effort to create a federal Credit Union Act in 1934. (Photo provided by CUNA)
The CUNA-sponsored conference began Sunday in Boston and ended Wednesday. “Grassroots activism is the roots and hallmark of our industry,” Mecham, president/CEO of Deseret First CU, Salt Lake City, said. U.S. credit unions’ first grassroots operation came when Filene and Roy F. Bergengren, on the heels of the Great Depression, created a network of coordinated credit unions to advocate a federal credit union act, he said. “They identified people who became advocates for the system. The first time the credit union movement engaged in a national mobilized movement was to get the Credit Union Act enacted.” President Franklin D. Roosevelt signed the act on June 26, 1934. He told of past fights with banks and grassroots efforts from the 1970s over share drafts to the 1980s when credit unions saw their independent regulator threatened and went to Washington, “standing 15,000 strong on the Mall.” They produced 6.5 million letters and petitions to Congress. And grassroots efforts hit a crescendo in the 1990s that brought about the Credit Union Membership Access Act (H.R. 1151). “Ours was a grassroots of our membership; banks’ was a grassroots of employees,” Mecham noted. Grassroots also helped when credit unions needed Congress to act on corporate credit union stabilization. This time, 30,000 e-mails helped that effort, he noted. Mecham outlined recent successes—getting stabilization expensing spread out over time, the elimination of cramdown provisions in legislation, achieving a place at the table of Senate leadership, removal of interchange fee issues from legislation, the first defeat of the Internal Revenue Service’s unrelated business income tax, and the increased national visibility of credit unions. “Our movement is poised for powerful, powerful opportunity,” Mecham said. “Don’t forget advocacy. Attend the Government Affairs Conference. Hike the Hill. Contact your legislators and regulators when called to action. And remember the words of Alphonse Desjardins (founder of Canada’s credit union movement), who said, ‘Let us never forget that the credit union above all else is an association of people, not dollars.”

CU System briefs (06/24/2009)

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* BOSTON (6/25/09)--World Council of Credit Unions Chairman Melvin
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Edwards, right, of the Caribbean Confederation of Credit Unions, presents the Credit Union National Association (CUNA) a vase in celebration of the 100th anniversary of credit unions in the U.S. Accepting is CUNA Chairman Kris Mecham, president/CEO of Deseret First CU, Salt Lake City. The presentation was made Tuesday during America’s Credit Union Conference and Expo in Boston. Mecham also presented a globe memento to CUNA on behalf of the Caribbean Confederation. CUNA President/CEO Dan Mica accepted that award. (Photo provided by CUNA) … * HONOLULU (6/25/09)--Paul Francis White, Sr., former chairman of the Hawaii Credit Union League board of directors, died June 17 at the age of 87. Originally from Dayton, Ohio, White was a U.S. Army Air Corp veteran where he was a flight instructor and captain with Hawaiian Airlines for 35 years. White was past president of Hawaiian Airlines FCU, Honolulu, and served on the Oahu Aloha Chapter board and the Hawaii board--where he was chairman from 1956-1957 and in 1960. During White’s first tenure as chairman, the Hawaii league launched a building project funded by voluntary contributions of $1 toward the purchase of bricks for the building. Under White’s second tenure, the league purchased the land on which the league building still stands ...

WOCCU CUNA collaborate to co-host conference

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WOCCU President/CEO Pete Crear takes the podium at America's Credit Union Conference just before he and CUNA President/CEO Dan Mica announced Tuesday that WOCCU and CUNA will combine their annual conferences, the World Credit Union Conference and America's Credit Union Conference, into a single conference for 2010. Next year's joint conference--The 1 Credit Union Conference--will be in Las Vegas, July 11-14, 2010. (Photo provided by World Council of Credit Unions)
MADISON, Wis. (6/25/09)--World Council of Credit Unions (WOCCU) and the Credit Union National Association (CUNA) next year will combine two of the credit union movement's largest educational opportunities--the World Credit Union Conference and America's Credit Union Conference--into one, unprecedented event. Leaders of both organizations believe “The 1 Credit Union Conference,” scheduled for July 2010 in Las Vegas, will offer credit unions worldwide a depth and breadth of knowledge unavailable in any other forum. “It is my pleasure to personally invite credit union representatives from around the world to what will undoubtedly be the most exciting event on 2010's global credit union calendar,” said Pete Crear, WOCCU president/CEO. “The 1 Credit Union Conference marks the first time World Council has met in the U.S. in more than a decade. We expect attendees from more than 60 countries to share their expertise, helping to define critical new directions for a new decade.” This is the first time the two organizations have collaborated on an event of this stature. In 2010, neither the World Credit Union Conference nor America's Credit Union Conference will be held as individual events. In their place, The 1 Credit Union Conference is expected to draw more than 2,500 attendees for four days of networking and educational sessions. For next year's conference-goers, the single professional development investment will yield greater benefits, tapping the unique resources both organizations offer, according to Dan Mica, CUNA president/CEO. “In these challenging times, education and development dollars need to bring a greater return than they ever have in the past,” Mica said. “Our combined conference provides the best and most economical opportunity we can offer for all of us to find the resources we need to help our credit unions survive and thrive.” The 1 Credit Union Conference will convene at the MGM Grand Hotel, July 11-14, 2010. Complete event details will be available in early 2010. America's Credit Union Conference and Expo ended Wednesday in Boston. For more information, use the links.

2010 will be pivotal says NCUAs Marquis

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BOSTON (6/25/09)--2010 will be a pivotal year on the credit union regulatory scene, National Credit Union Administration (NCUA) Executive Director David Marquis told a Wednesday morning breakout session on legislative and regulatory issues during the America’s Credit Union Conference (ACUC) in Boston.
National Credit Union Administration Executive Director David Marquis painted a picture for 2010 that includes "a small tidal wave" in losses at credit unions, especially at the end of the recession. He spoke during a legislative/regulatory breakout session Wednesday at America’s Credit Union Conference and Expo (Photos provided by CUNA)
Marquis noted that credit unions will have seven years to pay for corporate stabilization, with charges to the premiums estimated at 10 to 15 basis points a year. Reserve losses will go up, not down. “We still have allowances for loan losses to add to the corporate stabilization program,” he said, and there will be more pressure as the year continues for a convergence between groups’ estimates of losses and the actual losses. He anticipates that NCUA’s corporate credit union rulemaking will be proposed this fall, with a final rule perhaps by next spring. (See related story: NCUA: What corporate reform could look like) “We don’t know how many corporates there will be. It depends on how many you want to support,” he said, noting that short-term bonds are still in corporate portfolios and “selling them now would be a disaster.” For now, NCUA’s strategy includes sustaining the weakened corporates. “If you don’t, our hand will be forced and bigger losses will occur.” He noted that if corporates had not been insured, the movement would have lost 2,000 natural-person credit unions, who’ve suffered about $4 billion in losses. The fact that only credit unions put money into corporate credit unions is “a systemic problem in the corporate credit union structure.” “In the 90s, I thought I saw the worst of the worst (for natural-person credit unions). I was wrong,” he said. During the 80s, 1,300 credit unions closed or merged during that recession. In the 90s, credit unions lost money. “The biggest loss to the share insurance fund comes at the end of a recession,” Marquis added. Other factors include credit unions’ more aggressive pursuit of more complex services such as member business loans and home equity lines of credit. Also, some states are delaying foreclosures, which means foreclosures will pile up later. “There’s a small tidal wave coming,” Marquis warned. “2010 will be our pivotal year to get through.” He said NCUA is already reallocating resources so more experienced examiners are working with credit unions in troubled areas, and its board authorized hiring 50 more people this year.
Protecting credit unions' tax exempt status in a "very ambitious Congress" processing bills through at "breakneck speed" is only one priority of the Credit Union National Association (CUNA), John Magill, CUNA’s senior vice president of legislative affairs, told a breakout session at America's Credit Union Conference and Expo in Boston.
CUNA also had two speakers at the session. John Magill, senior vice president of legislative affairs at CUNA, said a “very ambitious Congress” is proposing legislative measures “at breakneck speed.” Two recent actions--credit card reform and the housing bill that contains corporate credit union stabilization fund--are of key interest to credit unions, Magill said. So far, no bill that has passed has included the interchange issue or mortgage cramdowns related to bankruptcies, but both issues likely are showing signs of resurfacing. Upcoming legislative issues include; member business lending, “which is always on a front burner for CUNA”; alternative capital; data security; student lending, where the federal government would involve itself in student lending and move aside private student lending; and Internet gambling. CUNA will continue working to protect credit unions’ tax exempt status, he said. “The tax exemption is worth $1.5 billion to $1.8 billion a year. If legislators are looking at health care funds and are down to $10 billion, we’re worried they will look elsewhere for funds. We’ll always have one eye open that issue.” The new Consumer Financial Products Agency has the potential to reduce regulatory burden, “but the devil’s in the details,” Magill said. CUNA is working closely with Harvard Professor Elizabeth Warren who is heading up the effort. “It’s important to not walk away in the beginning. If we can do better, we intend to do so. We did that with the cramdown measure. We’ll try to make a bad bill less bad, if possible.” Magill urged credit unions to contact their members of Congress to stress the importance of maintaining an independent credit union regulator. “Next week Congress is off. Pick up the phone and tell how important this bill is. Help us help you, and vice versa.” Also, CUNA Deputy Counsel Mary Dunn outlined four critical regulatory issues for credit unions:
* Regulatory restructuring. The proposed Consumer Financial Protection Agency is a “glass half empty, glass half full scenario,” Dunn said. “The fact that the agency is on the drawing board gives credit unions an important opportunity to be at the table and negotiate the best deal for credit unions.” It has serious implications as Congress addresses the full length and breadth of regulations that will be implemented. She noted that the proposal would give the Fed more authority over payments and settlements systems, which are not under regulatory oversight. The corporate credit unions could be swept into this. Corporates have a raised level of systemic risk, but for now, are not under the proposal. The present proposal does not seek to include NCUA. *
Mary Dunn, deputy general counsel of the Credit Union National Association (CUNA), outlined four issues critical to credit unions during America’s Credit Union Conference and Expo in Boston. They are: regulatory restructuring, changes at the top level of the National Credit Union Administration, examination issues, and corporate credit union system issues.
Top level changes at NCUA. The nomination of Debbie Matz as NCUA chair has been sent to the Senate. “Everytime we get someone new, there are changes. We will be on the lookout for new agendas, Dunn said. * Examination issues on the horizon. Dunn says credit unions are not as much concerned about the substance of the examinations as about the methodology used in insisting on a particular course of action. NCUA’s newly issued letter is “very positive in reinforcing that examiners want to work with credit unions that are in more difficult positions on net worth because of the stabilization process.” * Corporate credit union issues. Credit unions are being asked to help determine what the future corporate credit union system should be. It’s owned by credit unions, which means they “share in good times and share in the bad.” “Implementation of new legislation directs that the costs of the corporate system stabilization spread out.” Credit unions are encouraged to think, talk to their leagues, and CUNA. She noted a task force on the issue and said CUNA is working jointly with the National Association of Federal Credit Unions to present ideas to NCUA.
The CUNA-sponsored XCUC conference ended Wednesday.

Diabetes defense denied CU robber convicted

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OAK RIDGE, Tenn. (6/25/09)--U.S. District Court jurors in Knoxville, Tenn., did not buy into Thomas Alexander Phelan’s “diabetes defense” and found him guilty of robbing Tennessee Members 1st CU, Oak Ridge Tenn., in December 2006. Phelan’s attorney argued that Phelan’s blood sugar--recorded as abnormally high after his arrest--resulted in him being in such a strange state of mind that he didn’t realize what he was doing when he showed up at the credit union with a realistic-looking air pistol, demanding cash (The Knoxville News Sentinel June 24). Authorities allegedly had to give Phelan 15 units of insulin to steady him just so they could take him to jail, Kim Tollison, assistant federal defender, told the jury. Because of this, Phelan obviously did not understand what he was doing, Tollison argued. However, Cynthia Davison, assistant U.S. attorney, refuted that argument, claiming Phelan’s decision afterwards to celebrate the heist by quaffing a Yoo-hoo chocolate drink is what sent his blood sugar level skyrocketing, the newspaper said. Phelan entered the credit union wearing with Harley Davidson gear, including leather boots decorated with flames. He called for a limousine to serve as his getaway vehicle, and paid for his Yoo-hoo with a wad of cash he stole from the credit union while an off-duty officer from the Knoxville Police Department watched, the paper said. Phelan will be sentenced Oct. 22.

Youth attend federation conference on underserved

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PHOENIX (6/25/09)--Twenty-three youth from community development credit unions (CDCUs) nationwide gathered in Phoenix at the National Federation of Community Development Credit Unions' 35th Annual Conference on Serving the Underserved, June 11-13.
Click to view larger imageAbout 23 youth attended the National Federation of Community Development Credit Unions' 35th Annual Conference on Serving the Underserved, June 11-13 in Phoenix. (Photo provided by the National Federation for Community Development Credit Unions)
The youth traveled to Phoenix to meet their peers from around the country and to advance their skills in financial education, community economic development, and in the management and operation of youth credit union programs, the federation said. The Federation's Youth Credit Union Conference began with a service-learning project at De Colores, a monolingual-Spanish safe space for women and children forced to flee their homes due to domestic violence. Youth participants toured the site, learned about the importance of the shelter, and volunteered their time to repaint the center. The conference also offered workshops. During one workshop, Elandria Williams of the Highlander Research and Education Center in Tennessee, focused on working with youth to understand the power dynamics in their local economies. Youth discussed their experiences with issues of race and class in the economy, and how they could work to build a new solidarity economy based on the ideals of equality and community. Thom Dellwo of Cooperative FCU, Syracuse, N.Y., spent time with the youth discussing the value of money and the importance of financial education. In Dellwo's workshop, youth discussed how much money they believe is needed to live comfortably and the importance of sharing their prosperity with the community. Youth also played a financial simulation game--Mad City Money--provided by the Credit Union National Association. Mad City Money is designed to help youth understand the importance of managing their finances by simulating the multitude of expenses youth might encounter. Pascua Yaqui, Native American musician, and Alex Maldonado, artist, performed music during the opening ceremonies of the conference. Maldonado, who makes his own native flutes and drums, donated a hand-made drum to support scholarships for next year's youth conference attendees. A drawing for the drum raised more than $1,000 for next year's conference in Pittsburgh.

CUNA Mutual to acquire retirement business

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MADISON, Wis. (6/25/09)--CUNA Mutual Group will acquire CPI Qualified Plan Consultants, Inc. (CPI), a retirement plan record keeper located in Great Bend, Kan. With the acquisition, CUNA Mutual will service more than 7,500 retirement plans with assets under administration nearing $10 billion. The sale is expected to close June 30. Terms of the cash transaction are not being disclosed. CPI is the largest employee-owned, third-party administrator in the U.S. It administers employee benefit plans including 401(k), profit-sharing, money purchase, 403(b) retirement plans, 457(b), flexible benefit, and non-qualified deferred compensation retirement plans. CPI also provides payroll services and 403(b) common remitter and compliance services. CPI provides administrative services to more than 3,600 clients nationwide with plan assets under administration of about $5 billion. CUNA Mutual currently serves more than 4,000 plans and 129,000 plan participants. CUNA Mutual’s Retirement Plan Services division, in Madison, Wis., specializes in providing fully bundled retirement plans to credit unions nationwide. CUNA Mutual’s plan assets under administration total nearly $5 billion. “Our customers will not notice any changes,” said Kevin Thompson, CUNA Mutual senior vice president of asset accumulation products. “We will operate as business-as-usual to avoid any disruption. Over time, we will look for ways to leverage each other’s strengths.”

Gen Y CU members key to building future

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Credit unions are missing an opportunity to build their future if they aren't working to attract young members and their business, Kris Wickline, consumer program manager at CUNA Mutual Group, told attendees Tuesday at America's Credit Union Conference in Boston. (Photo provided by CUNA Mutual Group)
BOSTON (6/25/09)--Credit unions are missing an opportunity to build their futures if they aren’t working to attract young members and their business, Kris Wickline, consumer program manager at CUNA Mutual Group, told attendees Tuesday at America’s Credit Union Conference in Boston. Credit unions that ignore this consumer segment do so at their peril, as complacency will result in this generation building relationships with other financial institutions, Wickline said. “You can’t afford to wait until they are the most profitable customer segment or have the most income power,” she said. “By then, they will have established financial relationships, and it will either cost you more to get them or you risk not getting them at all.” Also called Millenials, Generation Next, Generation Net or Gen O, members of Gen Y were born between 1977 and 1995, making them 14 to 32 years old. A close second to baby boomers in volume--roughly 76 million in Gen Y to 77 million boomers--this generation’s income is poised to outpace boomers’ by about $500 billion in about eight years. In the meantime, they represent the borrowers of the future to credit unions with their peak borrowing years right around the corner. Credit unions have an advantage in seeking to serve the financial needs of this generation because credit unions are trusted, have experience and a long history of advocacy, which are attractive characteristics to Gen Y, Wickline said. The time for credit unions to strike in serving young adults is now, she added. CUNA Mutual conducted market research with young adults in 2008 to understand their financial needs and behaviors. “To no surprise, we found that all the key life goals of young adults require the support of some type of financial product or service,” Wickline said. “Whether starting or building their careers, continuing their education or owning their first home, credit unions can offer young adults specific products and services to help achieve their goals. This is definitely good news, but there are barriers that credit unions need to overcome. “Our research found that for young adults, there are more important considerations than trust or having the right products,” she continued. “Access is crucial. In fact, for young adults, access trumps trust, products and services when it comes to selecting a primary financial institution. And unfortunately, it’s also an area where our research shows that both members and non-members think credit unions fall short.” Strong online capabilities and a great user experience are “table stakes” for serving Gen Y. They expect to be able to research and apply for products online quickly and easily. But they also expect to do business for certain things in person. For this generation of consumers, having multiple access points and integrated delivery channels are key. She added that serving their basic needs--building or repairing credit, debt management, money management and asset building--will create a more lasting relationship with this generation because they tend to favor one-stop shopping for their financial needs. Also, developing a business strategy around this generation isn’t enough; credit unions must turn that strategy into action by appealing to the unique consumer behavior of Gen Y, she said. Wickline outlined five specific identities of this generation to help credit unions develop their plans to attract this demographic and gave examples of how to make this successful.
* I expect big things!--Because this generation was raised to believe they were special and could do anything, they come with big expectations of the world. The first big expectation is their education. Wickline cautions not to ignore the significance of student lending in developing a longer term relationship. * I connect to transact, communicate and express myself--This generation doesn’t know life without computers, Internet service or mobile phones. They spend more time on the Web than watching television and communicate with peers through text messages and social media, including Facebook and MySpace. Because technology pervades every aspect of their lives, developing and maintaining functional websites is critical to attracting and keeping their business. “Make transacting quick and easy while communicating with them simply and where they’re at,” Wickline said. “Our research also found that young adults are looking for electronic means of communications from their preferred financial institution to learn about other products and services. Unfortunately, the traditional promotional methods that credit unions use are the least preferred by this generation.” * I research, seek opinions, buy and leave opinions--When it comes to making buying decisions, they do their own research, but seek reinforcement from their family, friends or the institution from which they’re buying a product. Credit unions should provide user recommendations on their websites to help influence Gen Y decisions regarding financial services. * I can save the world, for real--Gen Y was raised with a strong sense of community and taught to think in terms of the greater good. More schools encourage volunteering, supporting the message of social and environmental responsibility and making this generation the most socially conscious consumers to date. Credit unions should promote their values and community activities, and explore opportunities to either facilitate or engage young adults in community activities. * I love my helicopter parents--Wickline reminded the audience of the hovering nature of Boomer parents. Never before has a generation been so nurtured as Gen Y. Given this reality, parents can function as both the influencer and the decision maker with their Gen Y children, depending on the product and consumer’s age. She suggested leveraging marketing, communication and promotional efforts with parents when appropriate.
For more ACUC coverage, check out News Now’s blog and Credit Union Magazine’s daily reports online. The conference ended yesterday.

TJX to pay 9.75 million in data breach settlement

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FRAMINGHAM, Mass. (6/25/09)--TJX Cos. has agreed to pay $9.75 million in a settlement regarding a data breach announced in January 2007 that compromised many credit union members’ credit and debit cards. At least 45.6 million card numbers were compromised, and card companies such as Visa and MasterCard estimate that as many as 94 million cards were exposed (News Now Jan. 22, 2008). Credit unions nationwide incurred significant costs when they replaced members’ cards whose account numbers were exposed. Framingham, Mass.-based TJX announced the settlement Tuesday. The retailer settled with a multi-state group of 41 attorneys general to resolve the states’ investigations related to a criminal intrusion into TJX’s computer system. Under the settlement, TJX has agreed to:
* Provide $2.5 million to establish a new data security fund for use by the states to advance effective data security and technology; * Provide a settlement of $5.5 million together with $1.75 million to cover expenses related to the states’ investigations; * Certify that TJX’s computer system meets detailed data security requirements specified by the states; and * Encourage the development of new technologies to address systemic vulnerabilities in the U.S. payment card system.
Eleven indictments were announced in connection to the breach on Aug. 5, 2008. Two of the indicted criminals have since pleaded guilty, and two have pleaded guilty to related charges, TJX said in a release.